Thu, 03/05/2012 - 10:00
The US Commodity Futures Trading Commission (CFTC) has filed a federal court action charging Sidney J Charles, Jr, formerly of Bowie, Md, and his company, The Borrowing Station, LLC (Borrowing Station), of Bowie, Md, with fraud, misappropriation, and registration violations in connection with an off-exchange leveraged foreign currency (forex) Ponzi scheme.
On 23 April, 2012, the same day the complaint was filed, Judge Alexander Williams, Jr of the US District Court for the District of Maryland entered a restraining order freezing the defendants’ assets, prohibiting the destruction of books and records, and requiring Charles to appear before the court on 4 May, 2012, for a preliminary injunction hearing.
The CFTC complaint alleges that from at least October 2009 through at least July 2011, Charles and Borrowing Station fraudulently solicited and accepted approximately USD355,000 from at least 18 individuals to participate in a pooled investment vehicle that traded forex. In their solicitations, defendants promised substantial investment returns such as 25 per cent per year or 10 per cent per month, and falsely claimed that pool participant funds were guaranteed against trading losses. The complaint further alleges that Borrowing Station was unsuccessful in trading forex.
According to the complaint, defendants used pool participant funds to make purported profit payments to other participants. Charles is also charged with misappropriating pool participant funds to pay for personal expenses and to fund Borrowing Station’s operations. In total, the defendants allegedly misappropriated approximately USD290,000.
According to the complaint, despite promises to return their money, Charles has not returned funds to pool particpants, and Charles moved to Raceland, La.
The CFTC complaint also alleges that Borrowing Station and Charles failed to register as a commodity pool operator (CPO) and associated person of a CPO, respectively, as required under the Commodity Exchange Act (CEA) and CFTC regulations.
In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, trading and registration bans, and permanent injunctions against further violations of the CEA and CFTC regulations, as charged.
The CFTC appreciates the assistance of the United Kingdom Financial Services Authority.
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Fri, 28 Aug 2015 00:00:00 GMTInvestment Banking Restructuring Analyst/Associate
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